VT passes budget deal netting $8.5M from school budgets

Gov. Phil Scott, Senate President Pro Tempore Tim Ashe and House Speaker Mitzi Johnson outlined an agreement on an education savings proposal in advance of the legislative veto session.
APRIL McCULLUM/FREE PRESS

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Speaker of the House Mitzi Johnson, left, confers with Senate President Pro Tempore Tim Ashe as Gov. Phil Scott, rear, prepares to announce a new state budget and school employee health care deal at the Statehouse in Montpelier on Wednesday, June 21, 2017.(Photo11: GLENN RUSSELL/FREE PRESS)Buy Photo

MONTPELIER - The Vermont Legislature accepted a deal to resolve Gov. Phil Scott's veto of the budget and property-tax bills by requiring school districts to cut spending.

The compromise Wednesday capped an arduous negotiation over school employee health care, which became a surprise sticking point in the final weeks of the normal legislative session in April and May.

The new plan is expected to lower average residential property tax rates while avoiding a government shutdown when the current budget expires July 1.

In the bill, the Legislature tells school districts to reduce their budgets by $8.5 million in the coming fiscal year, and $4.5 million the following year, in anticipation of savings from lower-cost school employee health plans.

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Rep. Michael Hebert, R-Vernon, listens as Rep. Ann Donahue, R-Northfield, discusses an ammendment she plans to offer to a new state budget and school employee health care deal at the Statehouse in Montpelier on Wednesday, June 21, 2017.(Photo11: GLENN RUSSELL/FREE PRESS)

"All supervisory unions and school districts should be able to achieve savings to their budgets as a result of the transition to the new health care plans," says the bill, which was written by key lawmakers and state officials behind closed doors and made public the morning of the vote.

Scott introduced the proposal alongside House Speaker Mitzi Johnson, D-South Hero, and Senate President Pro Tempore Tim Ashe, D/P-Chittenden, in Montpelier on Wednesday morning, as lawmakers returned to the Statehouse for a special veto session.

"Compromise involves everyone getting a bit of what they want, while giving up parts of what they had hoped," Johnson said in a statement. "We achieved that sweet spot with this bill."

Savings and a study group

Under the budget and tax plan approved Wednesday, virtually every school district will be required to contribute to a total $13 million in savings, based on a formula that calculates how much each district hypothetically would save by using Montpelier's ideal health care contract terms.

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Gov. Phil Scott, left, Senate President Pro Tempore Tim Ashe, second from right, and Speaker of the House Mitzi Johnson, right, announce a new state budget and school employee health care deal at the Statehouse in Montpelier on Wednesday, June 21, 2017.(Photo11: GLENN RUSSELL/FREE PRESS)

The ideal terms include school employees paying 20 percent of their premiums for the Gold CDHP plan that will be offered in 2018. School districts would contribute money into a health reimbursement account or health savings account to cover the bulk of out-of-pocket costs.

There will be no statewide negotiation of school employee health benefits this year, as Scott originally proposed. However, a commission would study the idea and submit a recommendation by Nov. 1.

All new school employee contracts, with the exception of contracts that already have been signed, would expire in 2019 to leave the door open for a statewide negotiation at that time.

"I would say that there’s something to dislike about every aspect of this," Scott said. "Sometimes when you get to that point, it means you have a fairly good compromise.”

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President Pro Tempore Tim Ashe, left, yields the podium to Speaker of the House Mitzi Johnson after they and Gov. Phil Scott announced a new state budget and school employee health care deal at the Statehouse in Montpelier on Wednesday, June 21, 2017.(Photo11: GLENN RUSSELL/FREE PRESS)

The bill includes the following tax provisions:

Vermonters would pay, on average, a lower residential property tax rate compared with 2016-17, in part thanks to tax incentives from Act 46 school district mergers. The average would drop to $1.505, down from $1.527.

The statewide non-residential property tax rate would remain flat at $1.535. The bill vetoed by Gov. Scott would have raised the non-residential rate by 2 cents.

The state would use $35.2 million in one-time money to fund the education system and keep taxes low.

Concerns about impact on schools

Some lawmakers grumbled that the deal came too late or was unfair to school boards, whose next fiscal year also begins July 1.

Rep. Brian Cina, P-Burlington, read a statement from the Burlington School Board in opposition to the changes.

"This amendment before us will undermine the work of our local school boards by asking them to make changes to budgets that they already passed," Cina said after reading the statement.

Rep. Scott Beck, R-Saint Johnsbury, said the governor had achieved a good deal.

"It’s not going to be without its headaches, especially for districts that have already settled their contracts," Beck told fellow Republicans.

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Rep. David Sharpe, D-Bristol, chairman of the House Education Committee, discusses details of the new state budget and school employee health care deal to House members at the Statehouse in Montpelier on Wednesday, June 21, 2017.(Photo11: GLENN RUSSELL/FREE PRESS)

Nicole Mace, executive director of the Vermont School Boards Association, and Jeffrey Francis, executive director of the Vermont Superintendents Association, also argued that it was too late to ask school districts to reduce their 2017-18 budgets.

The two associations oppose the use of $35.2 million in one-time funds, calling the idea "bad fiscal policy" that could force taxes to rise next year.

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Rep. Valerie Stuart, D-Brattleboro, uses a flashlight to review details of a new state budget and school employee health care deal during a power outage at the Statehouse in Montpelier on Wednesday, June 21, 2017.(Photo11: GLENN RUSSELL/FREE PRESS)

"School districts are unable to respond to arbitrary mechanisms that reduce FY 2018 payments to districts from the state," Mace and Francis wrote in a statement this week. "Any solution to the impasse over teacher’s health insurance negotiations should not impact FY 2018 budgets, but should apply to FY 2019 and beyond."

Martha Allen, president of the Vermont-National Education Association teachers union, said she was thankful the bill preserved local collective bargaining.

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Gov. Phil Scott, left, answers questions after he and Senate President Pro Tempore Tim Ashe and Speaker of the House Mitzi Johnson announced a new state budget and school employee health care deal at the Statehouse in Montpelier on Wednesday, June 21, 2017.(Photo11: GLENN RUSSELL/FREE PRESS)

Allen worried, however, that school districts will be harmed by the mandated budget reductions.

"We feel that schools and school districts are going to end up — it'll hurt the kids in the long run because of the way it is constructed," Allen said in an interview.

Lawmakers worked late Wednesday evening to seal the budget deal after enduring a brief power outage and multiple debates over unsuccessful amendments.

Contact April McCullum at 802-660-1863 or amccullum@freepressmedia.com. Follow her on Twitter at @April_McCullum. Do you have a breaking news tip? Call us at 802-660-6500 or send us a post on Facebook or Twitter using #BFPTips.